Considering all the airtime that CNN and MSNBC have devoted to speculation about President Trump’s alleged ties to shadowy Russian financiers, the New York Times’ decision to publish all those details from the president’s tax returns has ironically proven that Trump doesn’t owe any substantial money to “Russia”.
Rather, while Trump’s company owes millions of dollars in personally-backed loans, the lender isn’t some oligarch; it’s Deutsche Bank, which, as has been widely reported by now, established a relationship with Trump in the late 1990s, and continued to finance the president’s businesses during and after “the Apprentice” era. Late last month, the NYT published a story filling in the details about how Trump managed to strong-arm DB into forgiving hundreds of millions of dollars Trump owed when he was just weeks away from default during the financial crisis.
As one can probably imagine, all of the investigations into President Trump’s finances have created serious headaches for the bank. And now – on election day, no less – Reuters reports that some of DB’s top risk managers are plotting ways to get the Trump loans off the bank’s books, a process that could become easier if he fails to secure a second term.
If Trump loses and Democrats sweep the Senate, the bank fears that a battle over Trump’s tax returns that has stalled in the courts might heat up, as a newly emboldened Sen Elizabeth Warren carries out the financial version of a colonoscopy in the hunt for wrongdoing committed by the president or the bank (during its dealings with the president).
But a loss could also make it easier for the bank to dump the loans, presumably since Trump becoming a private citizen again would make it easier for the holder of the loans to collect on his promised collateral if Trump should default.
So far, the Trump Org has only had to pay interest on the loans, which are backed by golf courses in Miami and hotels in Washington and Chicago. The entire principal is outstanding, and the loans come due in 2023 and 2024. The advent of the coronavirus outbreak has only increased the risk on the loans (as the properties backing them have now moved deeper into the red), making DB all the more eager to sell.
But the most important detail in the report comes at the very end, when the reporters explain how the bank would essentially be forced to extend the term once again if Trump were to win a second term, since executives fear the backlash of trying to seize assets from a sitting president.
If Trump is not in office, Deutsche Bank executives feel that it would be easier for them to demand repayment, foreclose if he is not able to pay it off or refinance, or try to sell the loans, according to two of the three bank officials.
Since Trump has personally guaranteed all the loans, Deutsche Bank could also seize the president’s assets if he is unable to repay, two of the three bank officials said.
If Trump wins a second term, Deutsche Bank executives feel their options would be fewer, the three bank officials said. The bank wouldn’t want the negative publicity inherent with seizing assets from a sitting president and would likely extend the loans until he is out of office, two of the bank officials said.
The bottom line, the three bank officials said, is that the matter won’t be resolved until well after the election.
Trump is probably worried about the financial fallout should he lose. But a defeat wouldn’t exactly set him on the road to ruin. After all, Trump made hundreds of millions of dollars in deals for endorsements and licensing just off the strength of ‘the Apprentice’. We imagine plenty of business opportunities will be waiting if Trump does leave the Oval Office.
We have just one question though: If Russian backers buy the loans, would that finally make Trump a ‘Russia-backed’ president?